Morgan Stanley's best refining ideas: VLO, PBF, MPC, PSX
- Valero Energy (VLO -1.7%) and PBF Energy (PBF -2.7%) are among the top picks among refiners by Morgan Stanley, which expects refined product demand to exceed new capacity in 2016 and that a significant decline in global growth would be needed for any negative revisions.
- Refiners easily outperformed the S&P and the energy sector in 2015, and the firm expects refiners to outperform again in 2016, driven by “positive earnings revisions from base crack spreads that drive higher-than-consensus cash returns."
- Stanley upgrades PBF to Outperform with a $49 price target and raises its target for VLO to $100 from $90; it also maintains Overweight ratings for Marathon Petroleum (MPC -5.5%) and Phillips 66 (PSX -2.5%) with respective price targets of $65 and $105.